CEOs and other top executives are increasingly in the hot seat when it comes to being able to leverage the potential power of digital technologies. They’re getting the message, and a sizeable portion recognize digital as the main force driving their businesses in the year ahead.

That’s the finding of the latest EY 2022 CEO Outlook Survey, which finds 47% of the 2,000 CEOs surveyed are relying on information technology, more than any other strategy, to compete in the economy ahead. These include using technology and automation to replace higher cost labor roles and improve customer interactions. Leveraging technology was a strategy that surpassed other priorities, such as investing in existing businesses to accelerate organic growth and value creation (21%), optimizing balance sheets or improving working capital management (22%), or focusing on sustainability (13%), or other strategies such as increasing sales, or expanding into new geographies.

Active involvement and endorsement of digital initiatives needs to come from the top. “An inconvenient truth for businesses undertaking digital transformations is that without focused and active CEO commitment, there is almost no chance of success,” according to an analysis from McKinsey. “That’s because a digital transformation is a business-model reinvention that requires different functions across the organization to work together in new ways, and can happen only through large-scale investments in building an entirely new set of capabilities,” the report’s authors, led by McKinsey’s Eric Lamarre and Kate Smaje, point out.

The key is to focus on business value, not the technology, Lamarre and Smaje urge. “The point of a digital transformation isn’t to become digital; it’s to generate value for the business. Successful CEOs are able to look past their current business to reimagine where transformative value is possible.” They illustrate, for example, that successful transformations focus on business domains. “In tandem with the company’s top team, the successful CEO works through all the most important elements of a transformation at the domain level—talent, tech and data, operations—to produce a detailed road map for action.”

Evolving to a tech and data business is also a key strategy that CEOs need to lead. “Digital CEOs recognize that data and technology are core competitive differentiators, and they run their business that way,” Lamarre and Smaje state. “The most successful CEOs prioritize tech and data in two ways. First, they obsess about how to apply tech and data to solving business problems or finding new opportunities. CEOs shouldn’t tolerate a structure where the business sets requirements on which IT must deliver. Rather, they should develop an operating model where technology and business collaborate on developing and delivering digital products and services.”

CEOs must take the lead in leveraging data to develop an analytics-driven approach, “Companies still often overlook the rich data at their disposal – the next big idea can be uncovered by analyzing this rich resource already within reach,” according to the EY report. “Leveraged correctly, data can create commercial advantages in the market as well as enhance operational effectiveness and process improvement within the business.”

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